1. WORKING CAPITAL
MANAGEMENT OF
PHARMACEUTICAL COMPANIES
PRESENTED TO:- PRESENTED BY:-
PROF. MEENA SHARMA CHHAVI
VATSALA
ARUJ
DINESH
MANISH

2. OBJECTIVE
The main objective of a company is to examine the working capital and
profitability of 5 pharmaceutical companies namely:-
CIPLA
RANBAXY LABORATORIES
LUPIN
GLENMARK
DR. Reddy’s
For this purpose, we have calculated the different financial ratios and
then observe the trend for different companies.The different financial ratios we
have calculated are:-
• Inventory Turnover Ratio
• Total Asset Turnover Ratio
• Debtors Turnover Ratio
• Fixed Asset Turnover Ratio

3. RATIO FORMULAS

4. INTERPRETATION OF RATIOS
• Inventory Turnover Ratio- It is one of the
efficiency ratios and measures the number of
times, on average, the inventory is sold and
replaced during the fiscal year.
• Inventory Turnover Ratio measures
company's efficiency in turning its inventory
into sales. Its purpose is to measure the
liquidity of the inventory.

5. Cont…
• Total Asset Turnover Ratio- The total asset
turnover ratio measures the ability of a
company to use its assets efficiently to
generate sales.
• The lower the total asset turnover ratio the
more sluggish the firm's sales.

6. Cont
• Fixed Asset Turnover Ratio- The fixed-asset
turnover ratio measures a company's ability to
generate net sales from fixed-asset
investments - specifically property, plant and
equipment.
• A higher fixed-asset turnover ratio shows that
the company has been more effective in using
the investment in fixed assets to generate
revenues.

7. Cont..
• Debtor Turnover Ratio- Debtor turnover ratio is
the relationship between net sales and average
debtors. It is also called account receivable
turnover ratio because we debtor and bill
receivables'
• Higher debtor turnover ratio is good because
more higher debtor turnover ratio means, more
fastly, we are collecting money. Lower debtor
turnover ratio is not good because it tells us that
we have not manage debtors better ways. Money
from debtors are not collected fastly.

8. 1. RANBAXY LABORATORIES
Year Mar '14 Dec '12 Dec '11 Dec '10 Dec '09
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Sundry Debtors 2,069.90 2,036.78 3,005.31 1,605.25 1,839.95
Cash and Bank
Balance 1,549.67 4,600.45 3,063.67 356.72 346.16
Loans and Advances 2,153.77 1,802.00 1,884.93 1,670.70 1,576.94
Total Current Assets 6,380.25 9,368.58 8,679.69 4,154.58 4,026.81
Net Current Assets 4,327.80 3,724.85 1,827.58 4,576.11 2,371.94
Current Liabilities 3,780.18 4,172.81 5,660.17 3,203.54 3,267.14
Current Ratio
Current Liabilities 3,780.18 4,172.81 5,660.17 3,203.54 3,267.14
Net working capital 547.62 -447.96 -3,832.59 1,372.57 -895.20
CL to net worth ratio

9. Liquid Asset 547.62 -447.96 -3,832.59 1,372.57 -895.20
Current Liabilities 3,780.18 4,172.81 5,660.17 3,203.54 3,267.14
quick ratio 0.14 -0.11 -0.68 0.43 -0.27
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Net working Capital -3,232.56 -4,620.77 -9,492.76 -1,830.97 -4,162.34
Inventory Management
Ratio -0.85402 -0.5911 -0.27502 -1.19751 -0.44222721
Sales Turnover 6864.94 6303.54 7799.06 5687.33 4,797.49
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Inventories Turnover Ratio 2.486684 2.30785 2.98733 2.593863 2.60633998
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Net Current Assets 4,327.80 3,724.85 1,827.58 4,576.11 2,371.94
Inventory to CA Ratio 0.637895 0.73328 1.42851 0.479143 0.77603143
Cash Turnover Ratio 4.429937 1.3702 2.54566 15.9434 13.8591692

10. 2. LUPIN
Year 2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Inventories 1,372.24 1,330.83 1,123.56 841.11 713.7
Sundry Debtors 2,859.92 1,874.27 1,490.80 1,234.28 916.59
Cash and Bank Balance 146.28 20.12 19.2 37.46 36.53
Total Current Assets 4,378.44 3,225.22 2,633.56 2,112.85 1,666.82
Loans and Advances 810.35 878.7 773.05 621.32 665.79
Net Current Assets 3,508.27 2,460.19 1,974.96 1,654.52 1,381.07
Current Liabilities 1,367.80 1,332.67 1,193.81 880.29 785.62
Current Ratio 2.81 1.59 1.19 1.1 0.96
Current Liabilities 1,367.80 1,332.67 1,193.81 880.29 785.62

11. Net working
capital 2,140.47 1,127.52 781.15 774.23 595.45
CL to net worth
ratio 0.63901853 1.18194799 1.52827242 1.13698772 1.3193719
Liquid Asset -3,568.09 -2,346.52 -1,860.51 -1,491.53 -1,001.03
Current Liabilities 1,367.80 1,332.67 1,193.81 880.29 785.62
Quick Ratio 2.27 1.69 1.59 1.75 1.68
Inventories 1,372.24 1,330.83 1,123.56 841.11 713.7
Net Working
Capital 2,140.47 1,127.52 781.15 774.23 595.45
Inventory
Management
Ratio 0.64109284 1.18031609 1.43834091 1.0863826 1.1985893
Sales Turnover 8,939.38 7,122.51 5,384.83 4,494.88 3,723.96
Cash and Bank
Balance 146.28 20.12 19.2 37.46 36.53
cash turnover
ratio 61.1114301 354.001491 280.459896 119.991458 101.942513

12. 3. DR. REDDY
Year 2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Inventories 1,592.10 1,526.50 1,326.70 1,063.20 897.4
Sundry Debtors 4,561.50 2,963.90 1,943.50 1,770.50 1,060.50
Cash and Bank
Balance 665.1 919.1 93.1 66.2 47.9
Total Current
Assets 6,818.70 5,409.50 3,363.30 2,899.90 2,005.80
Loans and
Advances 1,558.50 1,390.20 1,291.40 1,663.80 1,321.40
Net Current Assets 6,818.70 5,409.50 3,363.30 2,899.90 2,005.80
Current Liabilities 2,001.60 2,165.40 1,534.30 1,565.20 1,543.80
Current Ratio 1.92 1.95 3.18 2.59 2.17
Current Liabilities 2,001.60 2,165.40 1,534.30 1,565.20 1,543.80
Net working capital 4,817.10 3,244.10 1,829.00 1,334.70 462.00
CL to net worth
ratio 0.41552 0.667489 0.838874 1.172698 3.341558

13. Liquid Asset 6,153.60 4,490.40 3,270.20 2,833.70 1,957.90
Current Liabilities 2,001.60 2,165.40 1,534.30 1,565.20 1,543.80
quick ratio 1.5 1.68 1.95 2.06 1.57
Inventories 1,592.10 1,526.50 1,326.70 1,063.20 897.4
Net Working
Capital 4,817.10 3,244.10 1,829.00 1,334.70 462.00
Inventory
Management
Ratio 0.33051 0.470547 0.725369 0.796584 1.942424
Sales Turnover 9,728.00 8,434.00 6,780.20 5,285.80 4,469.60
Cash and Bank
Balance 665.1 919.1 93.1 66.2 47.9
cash turnover
ratio 14.62637 9.176368 72.82707 79.84592 93.31106
Inventories 1,592.10 1,526.50 1,326.70 1,063.20 897.4
Net Current
Assets 6,818.70 5,409.50 3,363.30 2,899.90 2,005.80
Inventories to net
current assets 0.23349 0.28219 0.39446 0.36663 0.4474

14. 4. CIPLA
Year Mar '14 Dec '12 Dec '11 Dec '10 Dec '09
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Sundry Debtors 2,069.90 2,036.78 3,005.31 1,605.25 1,839.95
Cash and Bank Balance 1,549.67 4,600.45 3,063.67 356.72 346.16
Loans and Advances 2,153.77 1,802.00 1,884.93 1,670.70 1,576.94
Total Current Assets 6,380.25 9,368.58 8,679.69 4,154.58 4,026.81
Net Current Assets 4,327.80 3,724.85 1,827.58 4,576.11 2,371.94
Current Liabilities 3,780.18 4,172.81 5,660.17 3,203.54 3,267.14
Current Ratio
Current Liabilities 3,780.18 4,172.81 5,660.17 3,203.54 3,267.14
Net working capital 547.62 -447.96 -3,832.59 1,372.57 -895.20
CL to net worth ratio

15. Liquid Asset 547.62 -447.96 -3,832.59 1,372.57 -895.20
Current Liabilities 3,780.18 4,172.81 5,660.17 3,203.54 3,267.14
quick ratio 0.14 -0.11 -0.68 0.43 -0.27
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Net working Capital -3,232.56 -4,620.77 -9,492.76 -1,830.97 -4,162.34
Inventory
Management Ratio -0.854022818 -0.591102782 -0.275021174 -1.197512794 -0.442227209
Sales Turnover 6864.94 6303.54 7799.06 5687.33 4,797.49
Inventories 2,760.68 2,731.35 2,610.71 2,192.61 1,840.70
Inventories Turnover
Ratio 2.48668444 2.307847768 2.987332948 2.593863022 2.606339979
Sales Turnover 6864.94 6303.54 7799.06 5687.33 4,797.49
Cash and Bank
Balance 1,549.67 4,600.45 3,063.67 356.72 346.16
Cash Turnover Ratio 4.429936696 1.370200741 2.545659291 15.94340099 13.85916917

16. 5. GLENMARK
Year Mar '14 Dec '12 Dec '11 Dec '10 Dec '09
Inventories 210.43 190.15 175.93 157.01 150.4
Sundry Debtors 1136.04 485.1 358.74 189.34 330.09
Cash and Bank Balance 108.46 167.79 11.86 27.52 3.59
Loans and Advances 833.6 1300.1 1195.13 1702.02 1057.84
Total Current Assets 14542.93 843.04 546.53 373.87 484.08
Net Current Assets 14434.47 675.25 534.67 346.35 480.49
Current Liabilities 874.61 982.44 436.56 241.67 228.41
Current Ratio 16.50 0.69 1.22 1.43 2.10
Current Liabilities 874.61 982.44 436.56 241.67 228.41
Net working capital 13559.86 -307.19 98.11 104.68 252.08
CL to net worth ratio 0.06 -3.20 4.45 2.31 0.91

17. Liquid Asset -874.55 -985.64 -432.11 -239.36 -227.50
Current Liabilities 874.61 982.44 436.54 241.67 228.41
quick ratio -1.00 -1.00 -0.99 -0.99 -1.00
Inventories 210.43 190.15 175.93 157.01 150.4
Net working Capital -1749.1555 -1968.078151 -868.6503007 -481.0313451 -455.914
Inventory Management
Ratio -0.12 -0.10 -0.20 -0.33 -0.33
Sales Turnover 2300.9 1949.3 1633.37 1221.68 1037.15
Inventories 210.43 190.15 175.93 157.01 150.4
Inventories Turnover
Ratio 10.93 10.25 9.28 7.78 6.90
Sales Turnover 2300.9 1949.3 1633.37 1221.68 1037.15
Cash and Bank Balance 108.46 167.79 11.86 27.52 3.59
Cash Turnover Ratio 21.21 11.62 137.72 44.39 288.90

18. CONCLUSION
Year 2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Ranbaxy 4.05 3.64 4.71 3.95 4.05
Glenmark 10.93 10.25 11.36 9.43 7.78
Cipla 3.74 3.5 3.82 3.36 4.18
Dr. Reddy Labs 6.11 5.53 5.54 5.36 5.39
Lupin 6.51 5.35 4.79 5.34 5.7
INVENTORY TURNOVER RATIO
0
2
4
6
8
10
12
2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Inventory Turnover Ratio
Ranbaxy
Glenmark
Cipla
Dr. Reddy Labs
Lupin

19. DEBTORS TURNOVER RATIO
Year 2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Ranbaxy 5.14 2.46 3.14 3.99 3.74
Glenmark 2.84 4.62 5.91 4.68 2.78
Cipla 5.56 5.18 4.63 4.15 3.31
Dr. Reddy Labs 2.59 3.44 3.6 3.67 3.54
Lupin 3.78 4.23 3.95 4.18 4.54
0
1
2
3
4
5
6
7
2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Debtors Turnover ratio
Ranbaxy
Glenmark
Cipla
Dr. Reddy Labs
Lupin

20. TOTAL ASSET TURNOVER RATIO
Year 2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Ranbaxy 0.98 0.95 1.36 0.61 0.66
Glenmark 0.71 0.69 0.61 0.4 0.42
Cipla 0.86 0.83 0.92 0.9 0.95
Dr. Reddy Labs 0.81 0.9 0.82 0.7 0.69
Lupin 1.26 1.32 1.14 1.09 1.08
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Total Asset Turnover Ratio
Ranbaxy
Glenmark
Cipla
Dr. Reddy Labs
Lupin

21. FIXED ASSET TURNOVER RATIO
Year 2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Ranbaxy 2.1 2.06 2.78 2.13 2
Glenmark 3.88 4.92 4.96 3.91 4
Cipla 1.74 1.65 1.62 1.61 1.94
Dr. Reddy Labs 2.05 2.07 1.94 1.75 1.86
Lupin 2.93 2.59 2.32 2.42 2.29
0
1
2
3
4
5
6
2013-2014 2012-2013 2011-2012 2011-2010 2009-2010
Fixed Asset Turnover Ratio
Ranbaxy
Glenmark
Cipla
Dr. Reddy Labs
Lupin

22. •Inventory turnover ratio is highest for GLENMARK
which is avg 9.95 and lowest for CIPLA which is avg 3.72
•Debtor turnover ratio is highest for CIPLA which is avg
4.57 and lowest for DR. REDDY which is avg 3.37
•Total asset turnover ratio is highest for LUPIN which is
avg 1.18 and lowest for GLENMARK which is avg 0.57
•Fixed asset turnover ratio is highest for GLENMARK
which is avg 4.33 and lowest for CIPLA which is avg
1.71
FINAL RESULTS